When a parent passes away, their assets—including gold jewellery—legally pass on to their children. It is completely permissible to sell inherited gold jewellery, but many people remain unsure about the tax implications and whether depositing the sale amount in their bank account could lead to complications. A recent query from Manoj Sharma of Noida highlights this concern, prompting tax experts to explain how such transactions are treated under income tax rules.

This detailed article explains the tax treatment of inherited gold jewellery, the conditions under which selling it may attract scrutiny, and what precautions beneficiaries must take.

According to tax expert and CA Balwant Jain, selling inherited gold jewellery is legally allowed, but tax liability may arise depending on the nature and timing of the sale. Several factors determine whether a transaction raises concern, such as:

• The total weight and value of the jewellery




• Whether the jewellery can be clearly classified as inherited




• The financial background of the deceased parent




• Whether the parent was a taxpayer




• The age and income status of the parent at the time of death

If the jewellery discovered in a bank locker is of reasonable quantity—typically consistent with what a person may accumulate over their lifetime—there is usually no difficulty. Therefore, if Manoj Sharma sells his late mother’s jewellery and deposits the proceeds in his bank account, the transaction should not pose a problem as long as he can reasonably justify its origin.

It is important to understand that although inheritance itself is not taxable, selling inherited jewellery can attract capital gains tax.

Jewellery is classified as a capital asset, and if sold after 24 months of ownership, it falls under long-term capital assets. Since Manoj inherited the jewellery from his mother, the period of holding is counted from the date of his mother’s purchase—not from the date he inherited it.

If the jewellery was acquired by the mother more than 24 months earlier, the gains from its sale will be treated as long-term capital gains (LTCG). In such cases:

• LTCG tax at 12.5% is applicable




• Surcharge and cess are added additionally




• The taxable gain is calculated as:
  Sale Price – Cost of Acquisition

If the jewellery was bought before 1 April 2001, taxpayers are allowed a concession. Instead of using the original purchase cost (which may be unknown), the fair market value (FMV) as of 1 April 2001 can be used as the acquisition cost.

This provision helps reduce the taxable gain, especially for old family jewellery passed down over generations.

Issues may arise only if the beneficiary cannot establish that the jewellery genuinely belonged to the deceased parent or was accumulated over time. In such cases, the tax department may treat the amount as unexplained income under Section 115BBE, leading to:

• 60% tax, plus




• Surcharge




• Cess




• Possible interest and penalties

To avoid this, it is advisable to keep supporting documents such as:

• Locker inventory records




• Old purchase bills (if available)




• Family declarations




• Will or succession documents




• Valuation reports

Selling inherited gold jewellery is completely legal, and depositing the sale proceeds in your bank account typically does not create problems—provided you can reasonably justify the ownership and inheritance. However, the sale will attract long-term capital gains tax at 12.5% if the jewellery was held for more than 24 months.

If the jewellery is very old, using the 1 April 2001 fair market value rule helps reduce tax liability.

For anyone planning to sell inherited jewellery, maintaining proper documentation and understanding capital gains tax rules is essential for a smooth and hassle-free process.